Full and Final: The Value of Moving Forward

With Waitangi Day upon us, it’s the perfect opportunity to reflect on what makes us unique. We're one of few nations built on a founding document promising partnership: the Treaty has been imperfectly honoured, fiercely contested, never abandoned… and the journey has taught us something valuable about moving forward without forgetting the past.

There's a story from Ngāi Tahu history that captures this lesson. It involves a sacred dogskin cloak, a violation of tapu, and a cost compounded beyond anyone's imagination.

Arowhenua Marae - Photo by Nick Stewart

The Cost of Feuds

Around 1826, while Chief Te Maiharanui was away, a woman from Waikākahi wore the kurīawarua – the Chief's sacred dogskin cloak. This act sparked the kai huānga feud: years of fighting between kin across Banks Peninsula, where the final insult to the enemy after battle was to consume them (kai huānga meaning ‘to eat a relative’, as the fighting was between hapū).[1]

This internal warfare weakened Ngāi Tahu at a crucial moment in time. Te Rauparaha of Ngāti Toa then swept down from Kapiti Coast with muskets. He found an iwi divided. The feud ended when the external threat loomed, but the damage had been done: the siege of Kaiapoi and the fall of Ōnawe found Ngāi Tahu already vulnerable because of the previous fighting.

The cloak was never worth what it ultimately cost.

The Next Fight: Te Kerēme

Ngāi Tahu learned from this. When the land was taken – eight million hectares purchased by the Crown for £2,000 through Kemp's Deed in 1848 – Ngāi Tahu made its first claim against the Crown in 1849, just one year after the deed was signed.[2]

For 149 years, generation after generation carried the fight forward. This became known as Te Kerēme (The Claim).

Above the Arowhenua Marae in Temuka, where tribal gatherings have been held for over a century, hangs the name Te Hapa o Niu Tireni: "The Broken Promises of New Zealand."[3] That name captures the weight of grievance the iwi carried, which were many and justified.

• The Crown had promised reserves for Ngai Tahu of approximately ten percent of the land sold, along with schools and hospitals. None materialised.

• Access to mahinga kai – traditional food gathering places – was lost.

• Sacred sites and urupā were alienated.

• By the early 1900s, fewer than 2,000 Ngāi Tahu remained alive in their own land, deprived of virtually everything required to survive beyond subsistence level.

The fight for justice took many forms. In 1877, the prophet Hipa Te Maiharoa led over 100 followers to Te Ao Mārama in the upper Waitaki – land he maintained had never been legitimately sold under Kemp's Deed. For two years they cultivated kai and taught tikanga, a peaceful assertion of rights that had been ignored.[4] When the armed constabulary came in 1879, Te Maiharoa chose not to shed blood. They left peacefully. Though he died before any resolution, his example of principled, persistent resistance without self-destruction gave strength to the generations who continued the fight.

The struggle continued through courts, commissions, and countless petitions. When Ngāi Tahu first took Te Kerēme to court in 1868, the government passed laws to prevent the courts from hearing it. A Commission of Inquiry a decade later had its funding halted by the Crown mid-investigation. In 1887, Royal Commissioner Judge MacKay acknowledged only a "substantial endowment" of land would begin to right so many years of neglect. By 1991, at least a dozen different commissions, inquiries, courts and tribunals had repeatedly established the veracity and justice of Te Kerēme.

Fast forward to 1998. Ngāi Tahu became the first iwi to settle with the Crown under the modern Treaty settlement process. The settlement was cents on the dollar – everyone knew it. The breach had been egregious, the losses enormous. By any measure, they deserved more.

But Ngāi Tahu took the deal anyway. Full and final. As Tā Mark Solomon reflected: "The Crown reckoned full redress was worth $12 to $15 billion. Our advisers thought closer to $20 billion. We settled for $170 million — a lot less, but it allowed Ngāi Tahu to move forward, to rebuild."[5]

The Rule of 72: Investing in the future

Why settle for less than one percent of what was owed? The Rule of 72 provides part of the answer. At 7.2% returns, money doubles every 10 years. That $170 million settlement has grown to $1.66 billion in net assets today - nearly a tenfold increase in 27 years.[6] But it required stopping the fight and starting to invest.

The opportunity cost of delay is staggering. Every year spent fighting is a year money isn't compounding. Every year locked in grievance mode is a year not building for the future. The settlement allowed Ngāi Tahu to shift from survival mode to growth mode, from defending what was left to creating what could be.

This principle extends far beyond Treaty settlements:

• Family disputes over estates burn tens of thousands in legal fees while the assets stagnate or depreciate.

• Former business partners spend more on lawyers than the company was ever worth.

• Divorce battles consume resources that could be rebuilding two separate lives.

 We hang in there because the principle matters, we deserve more, and because justice demands it.

And principle does matter. Justice is real – but so is your future. So is your peace of mind. So is the life you could be building instead of the grievance you're nursing.

Sometimes the juice isn't worth the squeeze.

The Value in Moving Forward

Holding grievances costs your mental health, your wellbeing, your ability to move forward – not to mention the fiscal cost. The human mind has limited bandwidth. Energy spent on past wrongs is energy unavailable for future opportunities. Anger may be righteous, but it's still corrosive.

You can be right, and still be trapped in a bad situation.

The settlement let Ngāi Tahu stop fighting the past (justified though they were) and start creating the future. That psychological shift may be worth more than any dollar figure – but the dollars did add up as well. Within a generation, the iwi went from near-extinction to becoming one of New Zealand's major economic and cultural forces. The asset base grew, yes, but so did everything else: language revitalisation programs, educational scholarships, marae restoration, cultural renaissance.

Modern New Zealand is a nation where nearly one in three people are first generation migrants, with fresh eyes unburdened by our nation’s history. These newcomers don't carry the weight of Te Hapa o Niu Tireni – the broken promises – and perhaps that lightness allows different possibilities.

That’s not to say we should forget. The name still hangs above Arowhenua Marae. The history is taught, remembered, and honoured. Moving on doesn't mean sweeping things under a rug and forgetting they existed. It means choosing where to invest your finite resources: backward into grievance, or forward into growth.

This Waitangi weekend, we celebrate a nation learning to move forward together, imperfectly but persistently. The dogskin cloak is long gone, but the lessons remain.

Sometimes "full and final" is the smartest decision you'll make. Not because you got everything you deserved, or because justice was fully served – but because opportunity cost exceeds what most people imagine.

In investment, and in life, the math is unforgiving. Every year looking backward is a year not compounding forward.

That's the real lesson Ngāi Tahu learned, twice over. Once the very hard way, fighting themselves while enemies approached, and once by choice: taking less than they deserved, and turning it into more than anyone expected.

The question isn't whether your grievance is justified. It probably is. The question must instead become: what's it costing you to hold on? And what could you build if you let it go?

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 443

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References

[1] Mikaere, B. (1988). Te Maiharoa and the Promised Land. Auckland: Heinemann.

[2] Te Rūnanga o Ngāi Tahu. (n.d.). Claim History. Retrieved from https://ngaitahu.iwi.nz/ngai-tahu/creation-stories/the-settlement/claim-history/

[3] Arowhenua Marae. (n.d.). Te Hapa o Niu Tireni - The Broken Promises of New Zealand. Temuka, South Canterbury.

[4] Mikaere, B. (1988). Te Maiharoa and the Promised Land. Auckland: Heinemann.

[5] Solomon, M. with Revington, M. (2021). Mana Whakatipu: Ngāi Tahu Leader Mark Solomon on Leadership and Life. Massey University Press.

[6] Te Rūnanga o Ngāi Tahu. (2024). Annual Report 2024. Retrieved from https://ngaitahu.iwi.nz

The People's Poet and The People's Purse: From Burns to KiwiSaver

"A man's a man for a' that." - Robert Burns, 1795 [1]

Nigh on Burns Day feels like an appropriate moment to reflect on Scotland's most beloved poet. Robert Burns was no mere wordsmith; he was a revolutionary who believed wisdom and dignity belonged to everyone, not just the privileged few. Writing in Scots dialect rather than formal English, he made poetry accessible to common people in the 1700s; a radical and transformative act in its time.

Burns lived during the Age of Enlightenment, when intellectual discourse was largely confined to universities and aristocratic salons. Yet here was a ploughman-poet who insisted profound insights could come from anywhere: the farm, the tavern, ordinary folk going about their daily lives. His poetry gave voice to universal human experiences in language the people could understand.

An 18th-century Scottish poet has more to do with modern finance than you might think. Burns' commitment to democratising culture mirrors a shift that's been happening in the investment world, culminating in what might be New Zealand's most egalitarian financial innovation: KiwiSaver.

Burns' Revolutionary Accessibility

When Burns penned verses celebrating ploughmen, mice, and haggis, he was doing something deeply subversive. He was adamant that insight into the human condition – love, loss, joy, struggle – wasn't the exclusive domain of the educated elite. His genius lay in understanding that emotional intelligence and wisdom about human nature mattered more than formal education or social standing.

Consider "Auld Lang Syne," sung around the world each New Year; a meditation on friendship and memory, accessible to anyone. Or "To a Mouse," where disturbing a field mouse's nest becomes a profound reflection on planning and uncertainty. These weren't lofty academic exercises but observations from lived experience.

Burns recognised that a farmer could possess a deeper understanding than a nobleman. He celebrated the common person through genuine respect for their capacity for wisdom and feeling. This wasn't sentimentality; it was a fundamental belief in human equality that was genuinely radical for his era.

The Long Road to Investment Democratisation

For most of human history, investing was an aristocratic pursuit. You needed significant capital, insider connections, and often formal education to participate. Even in more recent history, the average person's financial planning extended to perhaps a savings account and hoping their employer's pension would suffice.

The journey toward broader access has been gradual:

• Stock exchanges initially served merchants and wealthy traders.

• The 20th century brought mutual funds and pension schemes, but these remained largely employer-controlled or required significant individual initiative and financial literacy.

• The democratisation of investment accelerated with regulatory changes, technology, index funds, and online platforms.

Yet each advance still required knowledge and a confidence many New Zealanders lacked. We had democratised access… but barriers to participation remained.

KiwiSaver: The People's Purse

Enter KiwiSaver in 2007 – New Zealand's fiscal equivalent to Burns’ poetry [2]. Rather than another standard investment vehicle, it was a fundamentally egalitarian structure that would have made the Scottish bard proud.

KiwiSaver's genius lies in its true accessibility. It actively enrols people. Employers and employees both contribute. The government provides incentives. Millions of New Zealanders who might never have considered themselves "investors" were suddenly building wealth through capital markets.

The design was deliberately inclusive, as automatic enrolment meant participation became the default. Contribution rates started modestly, making it achievable for low-income workers whilst still meaningful. Importantly, the employer contribution requirement meant workers weren't building wealth alone – it was a structural recognition that wealth-building works best as a collective endeavour.

KiwiSaver has become the backbone of New Zealand's capital markets, channelling billions into productive investment [3]. As of 2024, over 3 million New Zealanders are members, with total funds exceeding $100 billion. This isn't just personal nest eggs; it's the foundation of New Zealand's investment infrastructure, funding businesses, infrastructure, and innovation.

Every working Kiwi (the cleaner, the teacher, the retail worker, the tradesperson) can build capital alongside CEOs and professionals. A person earning minimum wage with KiwiSaver has access to the same professional fund management and diversification as a high earner. The difference is scale, not opportunity.

This is investment democratisation at its finest. Not because it's simple, but because it's genuinely even-handed. Both employer and employee contribute and benefit.

Why the Human Element Still Matters

Burns understood that success in life wasn't just about opportunity; it was about how we think, feel, and respond to circumstances. Modern research tells us the same: emotional intelligence drives financial outcomes more than traditionally valued metrics like education or age [4][5].

KiwiSaver provides the vehicle. Successful wealth building still requires the human qualities Burns celebrated:

• Patience over panic

• Contentment over materialism

• Long-term perspective over short-term thinking

Burns understood human nature deeply: our capacity for both wisdom and folly, our tendency toward both courage and fear.

Consider the emotional journey of investing, where markets are in a state of flux, and news cycles fan the anxious flames. The temptation to react emotionally and flee markets during downturns, or chase returns during booms, undermines long-term success.

The most successful KiwiSaver investors aren't necessarily the wealthiest or most educated. They're the ones who maintain emotional discipline. They understand that a market correction isn't a catastrophe but an opportunity. They resist the urge to constantly check balances and tinker with allocations. They stay the course through volatility, because they know what Burns knew: that the best outcomes often require patience, faith, and the wisdom to see beyond immediate circumstances.

Understanding your own emotional responses is the foundation of sound decision-making.

The Need for Wise Counsel

Burns also knew the value of good companions and sound advice. "Auld Lang Syne" isn't just about nostalgia; it's about trusted relationships that endure through time.

Having access to KiwiSaver is transformative, but maximising its benefit requires guidance. Understanding contribution rates, choosing appropriate funds, adjusting as circumstances change, planning for retirement – these decisions benefit enormously from experienced counsel.

Consider the choices KiwiSaver members face:

1. Which fund suits your risk tolerance and timeline?

2. Should you contribute more than the minimum?

3. How does KiwiSaver fit with buying a home or other financial goals?

4. When should you adjust your strategy as you age?

These aren't trivial questions, and answers vary greatly depending on individual circumstances.

Just as Burns made poetry accessible by expressing profound truths clearly, good financial advice makes wealth-building accessible by clarifying complexity without oversimplifying it.

A man's a man for a' that – every person deserves both the tools and the counsel to build lasting wealth.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 441

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References

[1] Burns, R. (1795). A Man's A Man For A' That. In Poems Chiefly in the Scottish Dialect.

[2] Inland Revenue. (2007). KiwiSaver Act 2006: Implementation and Overview. Wellington: New Zealand Government.

[3] Financial Markets Authority. (2024). KiwiSaver Annual Report 2024. Wellington: New Zealand Government.

[4] Brown, K. W., & Ryan, R. M. (2003). The benefits of being present: Mindfulness and its role in psychological well-being. Journal of Personality and Social Psychology, 84(4), 822-848.

[5] Klontz, B., Britt, S. L., Mentzer, J., & Klontz, T. (2011). Money beliefs and financial behaviors: Development of the Klontz Money Script Inventory. Journal of Financial Therapy, 2(1), 1-22.

When Good Intentions Meet Poor Planning

A successful professional – let's call him "Mr H" – had built an impressive career and accumulated substantial wealth. He owned property, had invested in overseas estates, and maintained generous pension arrangements.

He also had a complex personal life: an estranged wife he still supported financially, a long-term partner who had borne his only child, and extended family who depended on him.

Before embarking on what would prove to be his final business venture, Mr H added a hasty codicil (an addition) to his existing will. In it, he praised his partner's invaluable contributions to his career and pleaded that she be given "an ample provision to maintain her rank in life."¹ He entrusted her and their young daughter as "a legacy to my company and extended family," confidently expecting that his colleagues and family would honour his wishes.

He was catastrophically wrong.

The Background: A Man at the Height of Success

Mr H had reached the pinnacle of his profession. He was celebrated, wealthy, and influential. He purchased a substantial country estate – a property with elegant gardens, spacious grounds, and all the trappings of success. He paid approximately $2.25 million for the initial property and would eventually expand his holdings to over 160 acres, spending another $2 million on additional land purchases, creating what he called his "paradise."

His partner, Miss E, was instrumental in transforming the property, which featured five spacious bedrooms, two large drawing rooms, a dining room, library, extensive grounds with ornamental gardens, and even an icehouse. Mr H was so delighted with the estate that he repeatedly expanded it, despite his own written advice to Miss E not to acquire anything "too large, for the establishment of a large household would be ruinous."

And oh, the irony of those prophetic words…

The Will: A Masterclass in What Not to Do

Despite his professional acumen and access to the best legal minds of his era, Mr H's estate plan was fundamentally flawed. His original will left his entire estate, including lucrative overseas investments generating substantial annual income, to his brother Mr W (a clergyman). To his partner Miss E, he left only the substantial home and gardens, as well as a modest $125,000 annual income from his overseas estate. His daughter Miss H received $1m for education and a $50,000 allowance annually.²

On paper, these seemed like reasonable provisions. In reality, they were a recipe for disaster.

The problems were immediate and devastating:

Failure #1: No Trust Structure

Despite trusts being well-established legal instruments at the time, Mr H left everything to Mr W outright, apparently assuming his brother would "do the right thing" and support Miss E and Miss H. Family loyalty, after all, should count for something. He didn't even put his wishes in writing within the will itself. He just relied on an understanding between brothers.

He was wrong. Mr W and his wife immediately distanced themselves from Miss E—conveniently forgetting that she had cared for their own children for years while they pursued their own interests, and kept every penny.³ Given Mr H's dangerous profession and rather unique home life situation, a trust would have worked particularly well to protect his vulnerable dependents. A trust would have ensured regular payments to Miss E, protected Miss H's inheritance until she came of age, and prevented Mr W from simply pocketing everything.

But Mr H chose personal trust over legal structure. This was a mistake.

Failure #2: Gifting Encumbered Assets

The substantial home and gardens had been Mr H's pride and joy, his "paradise" where he could finally relax between his demanding work commitments. The property required constant maintenance, employed numerous servants, and demanded significant annual upkeep costs that far exceeded the modest $125,000 annual income Miss E received.²

The estate became an albatross around her neck. She couldn't afford to maintain it properly, yet she couldn't bear to sell her only tangible connection to the man she loved. She was asset-rich but cash-poor, a predicament that would lead to her financial ruin. Had Mr H consulted with estate planning professionals, they would have immediately identified this mismatch between the asset's carrying costs and the income provided to support it.

The property needed either sufficient income to maintain it, or it should have been sold with the proceeds placed in trust for Miss E's benefit. Instead, he gave her an expensive liability disguised as an asset.

Failure #3: Relying on Third Parties

The codicil added just before his final business venture was emotional rather than legally binding. Mr H "hoped" and "trusted" that his business associates would provide for Miss E, citing her work and contributions to the company's success.¹ He wrote movingly about her service and sacrifice, expecting that gratitude and honour would compel them to act.

But hope isn't a legally enforceable instrument. When his business chose to ignore his dying wishes, there was no mechanism to compel them. They threw a lavish $3.5 million funeral celebrating his achievements but didn't spend a penny on his partner or child.² Miss E approached them repeatedly, armed with Mr H's codicil and the testimony of colleagues who had witnessed his wishes. They refused every time.

Had these provisions been written into a binding legal agreement or trust structure, Miss E would have had recourse. Instead, she had only Mr H's heartfelt words… which proved worthless in court.

Failure #4: No Contingency Planning

What if his business refused to honour his wishes? What if Mr W proved ungenerous? What if Miss E fell into debt due to the property's crushing costs? What if she died while Miss H was still a minor; who would protect the child then?

None of these scenarios were addressed. Mr H had made his fortune through strategic planning in his professional life, carefully considering risks and preparing for multiple contingencies. Yet he left his personal affairs almost entirely to chance, apparently believing that good intentions and family loyalty would be sufficient.

The Devastating Aftermath

Miss E tried desperately to maintain the substantial home and gardens as a memorial, entertaining influential contacts in hopes of securing the support Mr H had promised would come. She invested what little money she had into keeping up appearances, hoping that someone – Mr W, the business associates, influential friends – would finally help.

Instead, she fell deeply into debt. With no legal protection and no reliable income, creditors closed in.⁴ The very property that was supposed to provide her with security became her prison. Within just eight years of Mr H's death, she was arrested for debt. She and young Miss H fled the country, living in poverty overseas – a shocking fall for a woman who had once been celebrated in the highest circles of society.

Miss E died in squalor around Miss H's fourteenth birthday, denying to the end that she was the girl's mother – perhaps hoping to spare her daughter the stigma of illegitimacy that would have made her life even harder.⁵ Miss H had to be smuggled back home disguised as a boy to avoid arrest for her mother's debts.⁶ The daughter returned home penniless, her childhood shattered, to be passed between reluctant relatives who viewed her as an unwanted burden.

Meanwhile, Mr W received a $25 million grant to purchase an estate, along with prestigious titles for himself and his son; the very honours Mr H had aspired to but never achieved in life. Other family members received $2.5 million each.² Even Mr H's estranged wife, from whom he had been separated for years, received generous provision.⁷

Everyone was taken care of, except the woman and child he loved most.

From the Northern Club Art Collection
Title: Portrait of Lord Nelson
Artist: Benjamin West

The Reveal

The saga above isn't hypothetical, nor is it contemporary. This catastrophic failure of estate planning happened over 200 years ago. "Mr H" is Vice-Admiral Horatio Nelson, 1st Viscount Nelson: the most celebrated naval commander in British history, victor of Trafalgar, the man whose column still dominates London's Trafalgar Square. "Miss E" is Emma, Lady Hamilton, "Miss H" is their daughter Horatia, and "Mr W" is his brother, the Reverend William Nelson.

Merton Place, the estate Nelson loved so dearly, was eventually sold off in pieces. Today, the site where Britain's greatest naval hero found his "paradise" is occupied by modern housing estates and a pub called The Nelson Arms. Not a single brick remains of the house where he spent his happiest days.

If someone of Nelson's intelligence, status, and access to legal counsel could make such devastating mistakes, what hope do the rest of us have without proper planning?

6 Lessons for Today’s Investors

The lessons from this 200-year-old tragedy remain relevant today:

1.       Use trusts for complex situations. Don't rely on family members to "do the right thing." Create legally binding structures that ensure your wishes are carried out regardless of personal relationships or good intentions.

2.       Match assets to beneficiaries' actual needs. Don't gift property or assets that require more income than you're providing to maintain them. Consider the total cost of ownership, not just the asset's value.

3.       Make provisions legally enforceable. Emotional appeals and dying wishes carry no legal weight. If you want something done, make it a binding legal obligation, not a heartfelt request.

4.       Plan for contingencies. What if your primary plan fails? What if beneficiaries predecease you? What if relationships change? Good estate planning anticipates multiple scenarios.

5.       Don't let complex personal situations discourage proper planning. If anything, unusual family arrangements demand MORE sophisticated planning, not less. Nelson's situation (an estranged wife, a partner, an illegitimate child, and complex family dynamics) required expert legal structures, not informal arrangements.

6.       Review and update regularly. Nelson's codicil was added hastily before battle. Professional estate planning requires time, thought, and regular review as circumstances change.

200 years later, Nelson's strategic brilliance at Trafalgar is remembered and celebrated. But so is the tragedy of Emma Hamilton and Horatia Nelson, abandoned to poverty and disgrace despite his dying wishes:

“Take care of my dear Lady Hamilton, Hardy. Take care of poor Lady Hamilton.”⁸

He tried. But without proper legal structure and financial planning, good intentions meant nothing.

Nick Stewart

(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 439

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References

1. Encyclopedia.com. "Hamilton, Emma (1765–1815)." Women in World History: A Biographical Encyclopedia. Available at: https://www.encyclopedia.com/women/encyclopedias-almanacs-transcripts-and-maps/hamilton-emma-1765-1815

2. Wikipedia. "Emma, Lady Hamilton." Accessed November 2025. Available at: https://en.wikipedia.org/wiki/Emma,_Lady_Hamilton

3. Lady Hamilton & Horatio Nelson. "Nelson's Inheritance (part 50)." Words Music and Stories, January 7, 2023. Available at: https://wordsmusicandstories.wordpress.com/2023/01/07/lady-hamilton-horatio-nelson-nelsons-inheritance-part-50/

4. Wikipedia. "Horatia Nelson." Accessed November 2025. Available at: https://en.wikipedia.org/wiki/Horatia_Nelson

5. National Museum of the Royal Navy. "The extraordinary life of Horatia Nelson." Available at: https://www.nmrn.org.uk/news/extraordinary-life-horatia-nelson

6. Find a Grave. "Horatia Nelson Ward (1801-1881)." Available at: https://www.findagrave.com/memorial/6884289/horatia-ward

7. Lilystyle. "Nelson's Descendants in Brent." Available at: https://lilystyle.co.uk/nelson-s-descendants-in-brent.html

8. Goode, Tom and Dominic Sandbrook. "RIHC | Nelson EXTRA: The Fate of Lady Hamilton." The Rest Is History podcast, November 5, 2025. Available at: https://podcasts.apple.com/nz/podcast/the-rest-is-history/id1537788786

9. Merton Historical Society. "A History of Lord Nelson's Merton Place." Available at: https://mertonhistoricalsociety.org.uk/a-history-of-lord-nelsons-merton-place/

10. Warwick, Peter. "Here was paradise - A description of Merton Place." Available at: https://wandle.org/aboutus/nelson2005/paradise.htm

Note: Historical currency amounts (pounds sterling, circa 1805) have been converted to approximate modern dollar equivalents, accounting for inflation and purchasing power.

The 12-Month Tax Gambit: Labour's Calculated Risk

Announcing a major tax policy a year before an election isn't just unusual; it's almost unheard of.

Conventional political wisdom dictates you either implement unpopular measures early in your term, or promise them after securing victory. Labour's decision to foreground a 28% capital gains tax ‘CGT’ a full year out from polling day demands examination, particularly through the lens of economist Arthur Laffer. His insight cuts straight through political calculation: speeding fines are a tax. Governments use taxes to stop people doing things they don't want them to do. So why would you tax investment when the country desperately needs more of it?¹

The timing becomes immediately suspect. Labour sits in opposition facing a National-led government, and historically, opposition parties campaign on aspiration rather than taxation. Helen Clark's 2005 Labour government actively campaigned against CGT proposals, recognising the electoral toxicity.² Yet here we are in late 2025, with Labour essentially writing National's attack ads 12 months in advance.

The Political Theatre

The political play is obvious: announce now, let the controversy "settle," and by election day the CGT feels like old news rather than shocking revelation. Labour hopes voters will be desensitised to what might otherwise be campaign-ending policy. It's political inoculation through extended exposure, with the policy carefully designed as "CGT light" (exempting family homes, farms, KiwiSaver and shares) to avoid the comprehensive wealth taxation that spooked voters in previous attempts.²

Yet as business commentator Damien Grant observes, the policy amounts to "a marketing plan sketched on the back of a napkin that had been used to wipe the lipstick off a chardonnay glass after drinks at a Fabian Society soiree."⁶ The policy amounts to a few pages in a glossy press release with less substance than a frozen coke.

If you own property in July 2027 and sell it after that date, you pay 28% of any increase in value, with no allowance for inflation. Family homes are exempt. That's essentially it—the rest is left to imagination and future consultation.

Recent polling shows Labour's framing is working – 43% support versus 36% opposition.² The 12-month runway allows this narrative to solidify. Labour bets that sustained messaging about "fairness" will ultimately land better than National's "tax on ambition" counter-narrative.

Laffer Curve | Source: Norway's Wealth Tax Unchains a Capital Exodus

The Fine Fallacy

Laffer's analogy cuts through the fluff. When government fines speeding, fewer people speed – that's the point. When government taxes cigarettes heavily, fewer people smoke – that's the objective. These are taxes deliberately designed to discourage the behaviour.

Applied to investment taxes, the logic is inescapable. When government taxes investment gains at 28%, fewer people invest. Yet that's meant to be revenue-neutral economic policy rather than deliberate discouragement? You cannot fine an activity and simultaneously expect more of it.

The contradiction becomes starker considering New Zealand's actual needs. Treasury warns that 52% of total tax comes from personal income tax, and the group paying this tax is shrinking due to an ageing population.⁴

The country desperately needs productive investment in commercial property, business expansion, and capital formation. Yet Labour proposes taxing precisely these activities, at rates designed to be punitive enough to raise revenue.

This is the economic equivalent of installing speed cameras on the motorway while simultaneously complaining that traffic isn't moving fast enough. You cannot discourage and encourage the same behaviour simultaneously.

The Implementation Damage

The July 2027 implementation date provides convenient political distance: win in November 2026, govern for eight months, then introduce legislation.²

But here's where political cleverness creates economic damage - the announcement effect begins immediately. Why would a developer start a commercial property project in 2026 knowing that any gains realised in 2028 or 2029 will face 28% taxation? Investment decisions from now until 2027 will be distorted by anticipated future taxes, locking capital out of productive uses or sending it offshore.³

The economic damage begins not when the tax takes effect, but when it's announced. We're living through that damage period now. The speeding camera has been installed, and the signs are up; don't be surprised when drivers slow down.

The British Warning

Laffer's analysis of Gordon Brown's decision to raise Britain's top rate from 40% to 50% provides the cautionary tale. The UK Treasury's own "Laffer section" showed the increase "not only did not get more revenue, it got you a lot less prosperity. People left the country, people used tax shelters, dodges, loopholes, all that."¹ As Laffer emphasised, this wasn't his opinion imposing American economics on Britain—"This was Britain doing the Laffer curve."¹

As Laffer notes from decades of US tax data: "Every time we've raised the highest tax rate on the top 1% of income earners, three things have happened. The economy has underperformed, tax revenues from the rich have gone down, and the poor have been hammered."¹

Conversely: "Every single time we've lowered tax rates on the rich, the economy has outperformed. Tax revenues from the rich have gone up and the poor have had opportunities to earn a living, to live a better life."¹

The Practical Nightmares

The practical problems compound the economic ones. Grant notes that inflation has already created havoc in Australia, where properties often can't be sold “because almost all of the price is considered a capital gain. This will be worse on the Hipkins plan because there is no indexation.”⁶

Consider a property bought in 2015 for $500,000 is now worth $800,000. Under Labour's plan, the entire $300,000 gain faces 28% taxation – that’s $84,000. But how much of that gain is real appreciation versus inflation? Without indexation, investors pay tax on phantom gains that merely reflect currency debasement.

Meanwhile, definitional nightmares await. Australia's capital gains tax guide runs to 339 pages, with court judgements adding hundreds more.⁶ Is replacing a kitchen a capital improvement or maintenance? What about landscaping? A 2028 Fisher and Paykel dishwasher replacing a 1980s Westinghouse: expense, or capital upgrade? As Grant notes drily: "Tax lawyers and accountants will be kept busy."⁶

The Chartered Accountants Institute supports Labour's proposal – hardly surprising, given it guarantees full employment for their profession dealing with compliance complexity.

The Fiscal Illusion

Even Chartered Accountants acknowledge that CGTs "do not generate significant revenue in the short or even medium terms. Long term, however, they typically provide a steady revenue stream… Using them to cover a specific policy expense is unusual."⁴ Yet Labour wants to use this non-existent revenue immediately to subsidise doctor visits.

As Grant observes: "There is a cash shortfall on Labour's own analysis in the early years which, like everything else in this policy, the resolution is left to the imagination."⁶ Here's the speeding fine logic again: if you install cameras to generate revenue from fines, you're simultaneously reducing the very behaviour that generates the revenue.

Successful speed cameras mean less speeding, and therefore less revenue. A capital gains tax that successfully deters property speculation means less property investment, and again, less revenue.

The Historical Pattern

This is Labour's seventh CGT attempt since 1973.² Norman Kirk's first attempt taxed gains at up to 90%, a rate so confiscatory it was quickly abandoned. Phil Goff's 2011 version, David Cunliffe's 2014 proposal, and Jacinda Ardern's 2019 attempt all failed politically.

Each previous effort proved politically costly and economically counterproductive. Voters instinctively understand Laffer's speeding fine logic, even if they can't articulate the economics by name. They recognise taxing investment reduces investment, just as fining speeding reduces speeding. Winston Churchill’s timeless observation perfectly captures the impossibility of taxing your way to prosperity – you cannot stand in a bucket and lift yourself up by the handles.⁵

The Alternative Vision

Laffer's prescription for struggling economies is brutally simple: "You want a low-rate, broad-based flat tax, spending restraint, sound money, minimal regulations, and free trade. And then get the hell out of the way."¹ Labour offers the opposite with new taxes on capital, sketchy implementation details, and revenue projections that don't add up.

As Laffer puts it: "Poor people don't work to pay taxes. They work to get what they can after tax. It's that very personal and very private incentive that motivates them to work, to quit one job and go to another job, to get the education they need to do it."¹ Replace "poor people" with "investors" and the logic remains - capital seeks returns. Tax those returns heavily enough, and capital goes elsewhere.

Perhaps most revealing: if this policy were genuinely beneficial for economic growth, why the elaborate political choreography? The answer lies in Laffer's observation about lottery tickets: "Everyone—tall, short, skinny, fat, old, young—they all want to be rich. Why does your government then turn around and tax the living hell out of the rich?"¹

New Zealanders don't want to punish success; they want pathways to achieve it themselves. They buy lottery tickets hoping to strike it rich. The government encourages dreams of wealth while simultaneously taxing the achievement of wealth.

The Verdict

The election will shortly reveal whether Labour's calculated 12-month strategy succeeds politically. By announcing early, they've given the policy time to settle, given themselves something concrete to campaign on, and satisfied membership demands for action on wealth taxation.

But both Laffer's economic analysis and Grant's practical critique suggest that regardless of electoral outcome, the policy itself represents strategic error. It's economic theory ignored in favour of political positioning.

New Zealand has better options. Genuine broadening of the tax base, reform of property taxation to encourage productive use, addressing infrastructure bottlenecks, and creating conditions for productivity growth would all contribute more to long-term prosperity than taxing capital gains at 28%. But those approaches require the hard work of reform rather than the easy politics of taxing "wealthy property investors."

Is Labour's CGT announcement politically canny, or economically catastrophic? When you deliberately discourage an activity through taxation, you can’t be surprised when you get less of it.

Labour has installed the camera; investment will slow accordingly. Whether that's clever politics or economic self-harm depends entirely on whether you're focused on winning the next election or building the next generation's prosperity.

As Laffer would note, you cannot tax an economy into prosperity. And you most certainly cannot stand in a bucket and lift yourself up by the handles.

Nick Stewart
(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 433

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References

1. Simmons, M. (2024). Reality Check: Interview with Arthur Laffer. Times Radio.

2. Opes Partners (2025). 'Does New Zealand Have a Capital Gains Tax? [2025]'. Available at: https://www.opespartners.co.nz/tax/capital-gains-tax-nz

3. RNZ (2025). 'What you need to know: Seven questions about a capital gains tax'. Available at: https://www.rnz.co.nz/news/business/577065/what-you-need-to-know-seven-questions-about-a-capital-gains-tax

4. Chartered Accountants Australia and New Zealand (2025). 'Capital gains tax must be considered as part of tax reform'.

5. Churchill, W.S. (1906). For Free Trade. London: Arthur Humphreys.

6. Grant, D. (2025). 'Hipkins' capital gains tax policy leaves more questions than answers'. Stuff. Available at: https://www.stuff.co.nz/politics/360878756/damien-grant-hipkins-capital-gains-tax-policy-leaves-more-questions-answers

When Ideology Replaces Analysis: The Sparrow Lesson for Investors

It's fairly well known that Mao Zedong's Great Leap Forward (1958–1962) ended in one of history's deadliest famines: tens of millions died, villages emptied by hunger, fields stripped bare. What's less well known is how a war on sparrows helped set the catastrophe in motion.  [1]

‘Ed Brown’ by Michael Parekowhai, 2000 - A favourite of Nick’s that hangs on the wall at home.

In 1958, Mao launched the Four Pests Campaign, targeting rats, flies, mosquitoes… and sparrows. The tiny birds, he decreed, were "enemies of the people" for daring to eat the people's grain.  [2]

And so, an entire civilisation mobilised against the feathered menace. Schoolchildren banged pots and pans in the streets, peasants drummed on washbasins, and factory sirens screamed for hours to keep the birds in flight until they fell dead from exhaustion. Nests were torn down, eggs smashed, and chicks stomped into the earth.

The results were biblical. In Beijing alone, more than a million sparrows were killed in a matter of weeks. Rural communes competed to see who could pile the highest mountain of avian corpses, a kind of grotesque festival of progress.

But victory, when it came, was short-lived. The sparrows, it turned out, had been eating more insects than grain. Within a year, the skies were empty, and the earth was crawling. Locusts rose like living clouds, devouring fields from horizon to horizon. Peasants watched in horror as the crops disappeared into the mandibles of an unstoppable plague of their own making.

Rather than admit his mistake, Mao doubled down on absurdities. He replaced the sparrows with imported Soviet "science" – the theories of Trofim Lysenko, an agronomist who believed that crops could be re-educated through hard labour. Genetics was bourgeois nonsense, Lysenko said; what mattered was enthusiasm. If you ploughed deeper, planted closer, and shouted revolutionary slogans loudly enough, the harvest would multiply.

So, fields were churned to depths that eviscerated the biome, seedlings were planted shoulder to shoulder until none could breathe, and bureaucrats inflated yields to impossible heights. Mountains of fake grain were reported; much of the real grain was exported to show socialist success.

By 1960, China was starving. Whole provinces were dying in silence. Still, the propaganda blared: "The people's communes are good!"

A survivor later put it simply: "We killed the birds, and then the insects ate everything else."

New Zealand's Sacred Cow

We have our own version of Lysenko's ideology. You've heard it at every barbecue, every family gathering, every pub conversation about money:

• "You can't go wrong with bricks and mortar."

• "Buy land – God's not making any more of it."

• "Rent money is dead money."

• "Safe as houses."

• "Property always goes up."

For two decades, these mantras proved prophetic. House prices in Auckland rose 500% between 2000 and 2021. Kiwi households saw their home become their retirement plan, their children's inheritance, their ticket to prosperity. Property investment became a religion, complete with its own prophets (real estate agents), its own evangelists (property coaches), and its own scripture (Rich Dad Poor Dad).

The scriptures were simple: leverage to the hilt, buy multiple rentals, negative gear against your income, and watch the capital gains roll in. Interest rates were at historic lows (and surely they'd stay there forever). The government needed house prices to keep rising; from pensioners to banks, the entire economy seemed to float on residential property values.

Alas - ideology, no matter how many believers it has, eventually meets mathematical reality.

When the Locusts Arrived

When the Reserve Bank lifted the Official Cash Rate from 0.25% to 5.5% between 2021 and 2023, the proverbial locusts began to swarm and feast.  [3]

Investors who'd stretched to buy rental properties on interest-only loans at 2.5% suddenly faced repayments double what they'd planned for. Those who'd bought at the peak in 2021, with the assumption that prices would continue relentlessly marching upward, now watched their equity disappear into the maw of change.

The median house price in New Zealand has fallen 18% from its 2021 peak according to CoreLogic, with steeper declines in some regions. In Wellington, prices dropped over 20%.  [5], [4]

Investors who bought at the top, banking on endless capital gains to compensate for negative cash flow, are now holding properties worth less than their mortgages. Negative equity isn't just an American problem from the 2008 crisis anymore; it's arrived in Epsom and Island Bay, in Christchurch and Hamilton. [5]

Mortgage stress has become a daily reality for thousands of New Zealand families. What was affordable at 2.5% is crushing at 7%. Property gambles that made sense when you could lock in cheap debt for years, now bleed money every month.

The Property Value Fundamentals We Ignored

Like Mao's bureaucrats ignoring the ecology of pest control, New Zealand ignored the fundamentals that underpin property values:

1.     Debt serviceability

We convinced ourselves record-low interest rates were the new normal; a pleasantly permanent feature of the economic landscape.

They weren't. They were weather, not climate.

Anyone who'd stress-tested their mortgage at 7% rates had a good idea what this would look like, but most didn't bother. After all, the Reserve Bank had signalled rates would stay low until 2024, hadn't they? (They had. They were wrong.)

2.     Yield vs. cost

Rental properties returning 3% gross yield while mortgages cost 7% represents what economist Hyman Minsky termed "Ponzi finance"—where income flows cover neither principal nor interest charges, requiring continuous new debt or capital appreciation to survive [6]. When prices stopped rising, the mathematics became unavoidable. You can't lose money every month and call it investing just because you hope the asset will appreciate.

3.      Supply and demand

Yes, God's not making more land. But man is making more zoning laws, more construction, and more high-density housing. Auckland's recent upzoning has added the potential for tens of thousands of new dwellings. National's push for urban intensification is changing the supply equation.

Supply does respond to price eventually. The assumption that demand would endlessly outstrip supply was ideology, not analysis.

4.     Demographic and economic shifts

Net migration swings wildly:

• We saw massive outflows to Australia when its economy boomed.

• Birth rates are falling.

• Working from home changed where people want to live, making provincial cities more attractive.

How to Avoid Being the Sparrow Killer

No investment is exempt from fundamental analysis – not even the quarter-acre Kiwi dream. Here’s what you need to do:

Test your assumptions first

Before buying property (or any investment), ask the hard questions: Can I afford this if interest rates hit 8%? What if the property stays vacant for three months? What if it needs a $30,000 roof replacement? What if prices don't rise for a decade—can I still hold on? If your investment only works under best-case scenarios, you're not investing—you're gambling with borrowed money.

Recognise ideology masquerading as wisdom

When someone says "you can't go wrong with property”: ask them about Japan, where house prices fell for fifteen consecutive years after 1991 with Tokyo property losing 60% of its value. Or Ireland, where property crashed 50% in 2008-2012. Or Detroit, where homes now sell for less than second-hand cars. [6]

The phrase "you can't go wrong" is the most dangerous in investing. You absolutely can go wrong with property, shares, bonds, or any other asset – when you pay too much, borrow too heavily, or ignore the fundamentals.

Understand that all assets are priced relative to alternatives

When term deposits paid 0.5%, property's 3% gross yield looked attractive by comparison. At 5.5% risk-free rates from the bank, suddenly that leveraged rental property earning 3% gross (maybe 1% after rates, insurance, maintenance, and management) looks substantially less clever. Capital always flows to its best risk-adjusted return. When safe returns become attractive again, risky assets must reprice.

Seek Wise Counsel

Honest, professional financial advice isn’t just valuable in these situations; it’s essential.

Not the mate at the barbecue repeating what worked in 2015. Not the property spruiker selling $5,000 weekend seminars on wealth creation. Not the Instagram influencer with a Lamborghini, a course to sell, and a P.O. box in the Cayman Islands.

Find an adviser who'll tell you hard truths instead of comfortable lies. Someone who'll stress-test your assumptions, challenge your thinking, and ask the questions you don’t want to acknowledge:

• What if you're wrong?

• What if rates stay high for five years?

• What if prices don't recover for a decade?

• What does your portfolio look like if this happens?

 The best financial advice often sounds boring. That’s because it is boring: it involves diversification across asset classes, appropriate leverage you can service in bad times, understanding what you own and why, and planning for scenarios you hope won't happen.

It's not a catchy slogan you can repeat at a dinner party. It's certainly not exciting enough to build a social media following around.

Instead, it's mathematics, discipline, humility, and the wisdom to know that "everyone's doing it" has never – not once in the history of markets – been a sound investment strategy. Quite the opposite; when everyone's doing it, that’s usually a good moment to step back and ask why.

Mao surrounded himself with yes-men who told him what he wanted to hear. The sparrows paid the price. Then the insects thrived. Then the people paid the price. The echo chamber produced catastrophe because ideology replaced observation, and enthusiasm replaced analysis.

The Bottom Line for Kiwi Investors

Don't let your financial future be decided by mantras. Don't let social ‘proof’ substitute for due diligence. And crucially, don't assume what has worked for the past twenty years will work for the next twenty.

Instead, seek counsel that respects the complexity of markets, acknowledges uncertainty honestly, understands risk as well as reward, and helps you build wealth on foundations stronger than popular sentiment or revolutionary enthusiasm.

The fundamentals always win. Always. The only question is whether you'll be positioned to weather the fallout, or whether you’ll be left exposed in the fields.

The locusts are always waiting.

Nick Stewart
(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 432

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References

[1] F. Dikötter, *Mao's Great Famine: The History of China's Most Devastating Catastrophe, 1958–-1962*.. London: Bloomsbury Publishing, 2010.

[2] J. Shapiro, *Mao's War Against Nature: Politics and the Environment in Revolutionary China*.. Cambridge: Cambridge University Press, 2001.

[3] Reserve Bank of New Zealand, “Official Cash Rate decisions and historical data,”, 2024. [Online]. Available: https://www.rbnz.govt.nz

[4] Real Estate Institute of New Zealand (REINZ), “Historical house price data and market statistics,”, 2024. [Online]. Available: https://www.reinz.co.nz

[5] CoreLogic New Zealand, “House price indices and market analysis reports,”, 2024. [Online]. Available: https://www.corelogic.co.nz

[6] H. P. Minsky, “The Financial Instability Hypothesis,”, The Jerome Levy Economics Institute Working Paper No. 74, 1992.

The Magnificent 7: Why Yesterday’s Winners May Not Be Tomorrow’s Champions

Financial advisers are facing intense pressure from clients: should portfolios be loaded up on the Magnificent 7 stocks (Apple, Microsoft, Amazon, Alphabet, Meta, NVIDIA, and Tesla)?

These tech giants have delivered spectacular returns and now dominate America’s largest companies. Clients’ friends are bragging about gains, financial media breathlessly covers every earnings report, and the fear of missing out is palpable.

But financial lessons tell us to look beyond the headlines and recent performance – and market history suggests this caution is warranted.

The Illusion of Permanence

When we look at today’s market leaders, it’s easy to assume they’ll remain on top indefinitely. These companies have massive cash reserves, dominant market positions, and appear to be shaping our technological future. But market history tells a different story.

Consider this statistic from Dimensional Fund Advisers’ analysis: of the 10 largest US companies in 1980, only three made it to the top 10 by 2000.[1] Even more striking, none of those 1980 giants appears in today’s top 10. Companies like IBM, AT&T, and Exxon – once considered unassailable titans – have been replaced by an entirely new generation of market leaders.

Source: Dimensional - Click for full information

This is more than trivia; it’s a fundamental lesson about impermanent market dynamics that should inform every portfolio decision.

Research from the Centre for Research in Security Prices demonstrates that market leadership is far more transient than most investors realise: In 1980, six of the 10 largest companies were energy firms.[1] Today, technology dominates. This wasn’t gradual. It was a wholesale transformation driven by innovation and shifting economic fundamentals.

This pattern should concern anyone betting that today’s technology concentration will last for decades. Seemingly unstoppable industries may face disruption from sources we cannot yet imagine.

Technological advancement doesn’t benefit only technology companies. Throughout history, firms across all industries have leveraged new technologies to innovate and grow. The internet didn’t just create wealth for internet companies; it transformed retail, finance, healthcare, and virtually every sector.

Similarly, McKinsey research suggests AI adoption could add trillions in value across all economic sectors, not just technology.[2] A pharmaceutical company using AI for drug discovery or a manufacturer deploying advanced robotics may deliver returns that rival pure-play tech stocks – anything is possible at this stage.

The Case for Diversification

Modern Portfolio Theory, developed by Nobel laureate Harry Markowitz, demonstrates that diversification is the only “free lunch” in investing – it reduces risk without necessarily sacrificing returns.[3]

Diversification doesn’t mean avoiding the Magnificent 7 per se. These companies earn their market positions through genuine competitive advantages. It does mean resisting the temptation to overweight them simply because they’ve performed well recently. A diversified portfolio allows participation in current market leaders while maintaining exposure to companies and sectors that may emerge as tomorrow’s giants.

Remember, many of today’s Magnificent 7 were relatively small or didn’t exist 25 years ago. The next generation of market leaders is likely being built right now.

Working with a financial adviser can help you recognise and combat recency bias – this is the tendency to assume recent trends will continue indefinitely. Behavioural finance research shows this cognitive bias often leads to poor investment decisions.[4] And as any adviser worth their salt will be able to tell you, the Magnificent 7’s impressive performance creates a psychological pull to buy more of these stocks – but this often means buying high and taking concentrated risk precisely when valuations are stretched.

Instead of chasing performance, you need to stay focused on your long-term goals. Maintaining discipline around portfolio construction through regular rebalancing forces you to trim any areas that have grown over-large, so you (or rather, your financial adviser) can redeploy capital to areas that may offer better prospective returns.[5]

The Path Forward

Market history doesn’t repeat itself, but it often rhymes. While predicting which companies will lead markets in 2040 or 2050 is impossible, the leaders of the pack will certainly change. New technologies, business models, and companies will emerge, and the current leaders may become footnotes in global markets history.

A globally diversified portfolio positions you to benefit from these changes, rather than being hurt by them. They participate in today’s success stories while remaining open to tomorrow’s opportunities.

The Magnificent 7 have earned their place among America’s largest companies through innovation and execution. But despite how tempting they are, the best course of action isn’t to chase yesterday’s winners or follow the herd – it’s to build resilient portfolios that serve your unique needs.

Building a plan that can weather change (while capturing opportunity wherever it emerges) requires diversification, discipline, and a healthy respect for the lessons of market history. If that sounds daunting, try arranging a chat with your local, fiduciary financial adviser to discuss what your first steps might be – it’s a better use of your time than tracking Magnificent 7 performance, anyway.

Nick Stewart
(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 429

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References

1. Dimensional Fund Advisers. (2024). “Will the Magnificent 7 Stay on Top?” *Dimensional Quick Take*, using data from the Centre for Research in Security Prices (CRSP) and Compustat, University of Chicago.

2. McKinsey Global Institute. (2023). “The Economic Potential of Generative AI: The Next Productivity Frontier.” McKinsey & Company.

3. Markowitz, H. (1952). “Portfolio Selection.” *The Journal of Finance*, 7(1), 77-91.

4. Kahneman, D., & Tversky, A. (1979). “Prospect Theory: An Analysis of Decision under Risk.” *Econometrica*, 47(2), 263-291.

5. Buetow, G. W., Sellers, R., Trotter, D., Hunt, E., & Whipple Jr, W. A. (2002). “The Benefits of Rebalancing.” *Journal of Portfolio Management*, 28(2), 23-32.

When Geniuses Get Burned: A Timely Lesson on Bubbles, Diversification, and the Perils of FOMO

On a crisp morning stroll through Edinburgh recently, whilst following my son’s rugby team in the UK, I found myself at the Scottish National Gallery of Modern Art, where Eduardo Paolozzi’s 1989 statue of Sir Isaac Newton caught my eye. Cast in bronze with geometric fragments, Newton is depicted as the “Master of the Universe,” his head bowed intently over mathematical instruments. It’s a mesmerising tribute to one of history’s greatest intellects, immortalised in deep contemplation of the cosmos.

But statues don’t tell the full story. What Paolozzi’s work omits is Newton’s humiliating financial debacle during the South Sea Bubble of 1720-a cautionary tale that resonates profoundly in today’s volatile markets. Historical accounts reveal that Newton initially invested a modest sum in South Sea Company stock, cashed out with a respectable profit, then watched enviously as his friends amassed fortunes while prices skyrocketed. Succumbing to the fear of missing out (FOMO), he re-entered the market near its peak with a much larger stake [1]. When the bubble inevitably burst, Newton lost approximately £ 20,000, equivalent to about £6 million today (adjusted for inflation), or roughly $14 million in New Zealand dollars [2]. His wry reflection afterwards? “I can calculate the motions of heavenly bodies, but not the madness of people” [3].

This episode isn’t just an amusing footnote in the life of a scientific giant; it’s a stark reminder that even the sharpest minds are vulnerable to market mania. If Newton, the architect of calculus and gravity, couldn’t outsmart the crowd, what hope do everyday investors have in navigating today’s hype-driven landscapes, like the AI boom?

Unpacking the Bubble Phenomenon

Financial bubbles are seductive traps, identifiable only after they’ve popped. They thrive on compelling narratives that mask underlying risks. In 1720, the South Sea Company’s promise of exclusive trade rights with South America fuelled wild speculation, driving stock prices from around £100 to over £1,000 in months before collapsing [4]. Closer to home, New Zealand’s 1987 sharemarket crash serves as a vivid parallel: fuelled by deregulation and easy credit, the NZSE index surged, only to plummet 60% in weeks, wiping out leveraged fortunes in property and equities [5, 11]. The aftermath was brutal: bankruptcies, shattered families, and a lingering distrust of markets that scarred a generation.

More recently, Auckland’s property market exhibited bubble characteristics, with median house prices tripling between 2011 and 2021 amid low interest rates and high demand [6]. These episodes highlight a pattern: euphoria driven by “this time it’s different” optimism, followed by inevitable reversion to fundamentals.

Enter today’s hottest debate: artificial intelligence. Is AI the next fire, wheel, or microchip-a paradigm shift revolutionising healthcare, agriculture, and beyond? Or is it overhyped, with valuations echoing the dotcom bubble, where slapping “.com” on a business sent stocks soaring regardless of viability [7]? Companies like Nvidia have seen shares rocket over 100% in the past year on AI enthusiasm, but sceptics warn of irrational exuberance. The truth? No one knows for sure. AI could deliver transformative value, or it might follow the path of past tech fads, leaving late entrants holding the bag.

Why Diversification is Your Best Defence

In the face of such uncertainty, diversification emerges not as a conservative cop-out, but as a strategic imperative. When predicting individual winners is near-impossible, the smart play is to spread your bets across the market. Own a broad index fund, and let capitalism’s machinery-competition, innovation, and resource allocation-work its magic over the long haul.

Strolling Edinburgh’s Royal Mile, I paused at the statue of Adam Smith, the Scottish economist whose 1776 masterpiece, The Wealth of Nations, introduced the “invisible hand” [8]. Smith argued that self-interested individuals, through free markets, inadvertently create societal benefits by directing capital to its most productive uses. No top-down planning required-just the aggregate wisdom of millions of decisions fostering efficiency and growth.

This evolutionary aspect of capitalism is key: viable companies flourish, while hype-driven ones wither. Yet spotting them in advance is a fool’s errand. Studies show that even seasoned fund managers underperform broad market indices over time, with survivorship bias and fees eroding returns [9]. For individual investors chasing the next Amazon or dodging the next Enron, the odds are stacked even higher against success.

New Zealanders have ample tools for diversification: local or global index funds covering thousands of companies, often accessible via platforms like KiwiSaver. These vehicles ensure you participate in growth sectors like AI without overexposure. Miss the ground-floor entry on Nvidia? No problem-a diversified portfolio still captures the upside while shielding you from sector-specific crashes.

The Psychology of Smart People Making Dumb Moves

Newton’s misadventure underscores a timeless truth: raw intelligence offers no immunity to behavioural biases. As Daniel Kahneman explains in Thinking, Fast and Slow, our brains are wired for quick, intuitive decisions that often lead us astray in complex environments [10]. Newton fell victim to a classic cycle: initial caution (fear of loss), sidelined envy (FOMO), and impulsive greed fuelled by social proof from his peers.

This dynamic played out vividly in New Zealand’s 1987 crash. Professionals-doctors, lawyers, accountants-piled into “can’t-lose” investments with borrowed money, convinced by the herd that prices would rise forever. When reality hit, the rapid 60% drop erased wealth overnight, triggering a cascade of personal and economic fallout [11].

Human nature hasn’t evolved since Newton’s day. Greed, fear, and herd mentality persist, amplified by social media and 24/7 news cycles. In the AI era, viral success stories can lure even savvy investors into concentrated bets, ignoring the risks.

Building Resilience Through Diversification

While diversification won’t eliminate downturns (markets are volatile by nature), it mitigates ruinous losses. Imagine holding only South Sea stock: total devastation. But a basket of British equities? Painful, but survivable, with recovery potential. The MSCI World Index’s ~8% average annual gross return over 30 years, weathering multiple crashes, exemplifies this resilience [9].

Apply this to AI: if it revolutionises society, diversified holders benefit via broad tech exposure. If it fizzles, your portfolio’s other sectors (healthcare, consumer goods, energy) provide ballast [12]. The key is discipline: resist the siren call of hot tips and maintain a balanced allocation.

Final Reflections: Wisdom from the Past

Gazing at Newton’s statue, the irony hit me: a monument to unparalleled genius, yet its subject was felled by the same primal instincts that plague us all. Bubbles will recur because human psychology is immutable. But we can arm ourselves with humility, acknowledging our limitations in outguessing markets.

Embrace diversification as your anchor, harnessing capitalism’s long-term compounding power. You don’t need Newton-level brilliance to thrive financially-often, recognising your non-genius status is the cleverest strategy.

And don’t go it alone. Newton might have avoided disaster with impartial advice. A trusted financial adviser won’t forecast the next bubble but will enforce discipline: reminding you that past performance doesn’t predict future results, crowds are often wrong, and capital preservation trumps speculative gains. They’ll tailor a diversified plan to your goals, helping you navigate emotional turbulence and emerge stronger.

In an unpredictable world, this approach turns potential pitfalls into opportunities. Review your portfolio today: is it diversified enough to withstand the next mania? If not, seek wise counsel-it could be the difference between exiting happy and exiting broke.

Nick Stewart
(Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha)

Financial Adviser and CEO at Stewart Group

• Stewart Group is a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm providing personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz

• Article no. 428

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References

1. Odlyzko, A. (2018). Notes and Records: The Royal Society Journal of the History of Science, 73(1), 29-59.

2. UK Office for National Statistics Composite Price Index; Bank of England inflation calculator (1750-2025).

3. Levenson, T. (2009). Newton and the Counterfeiter. Houghton Mifflin Harcourt.

4. Dale, R., et al. (2005). The Economic History Review, 58(2), 233-271.

5. Easton, B. (1997). In Stormy Seas. Otago University Press.

6. Reserve Bank of New Zealand Housing Data Series (2011-2021).

7. Shiller, R. J. (2015). Irrational Exuberance (3rd ed.). Princeton University Press.

8. Smith, A. (1776). Wealth of Nations. W. Strahan and T. Cadell, London.

9. Malkiel, B. G. (2019). A Random Walk Down Wall Street (12th ed.). W. W. Norton & Company.

10. Kahneman, D. (2011). Thinking, Fast and Slow. Farrar, Straus and Giroux.

11. Steeman, M. (2017). Stuff.co.nz, 19 October 2017.

12. Bogle, J. C. (2017). The Little Book of Common Sense Investing (10th Anniversary ed.). John Wiley & Sons.

Chunuk Bair: The Dawn That Changed a Nation

A Canny View Commemoration

August 8th marked the 110th anniversary. Today, I will pause from my usual financial themed article for one of reflection and gratitude in memory of all who fell; the 313 souls of the Wellington Battalion who gave their lives for freedom's cause.

WWI New Zealand Ensign attributed to 6/159 Private John Taylor – Quinn’s Post, Gallipoli (cropped). Collection of the National Army Museum Te Mata Toa (2000.533). Image used with permission.

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There are moments in a nation's history when time itself seems to pause - when the very essence of what a people might become hangs in the balance on a distant hillside.

For New Zealand, that moment came at dawn on August 8, 1915, when Lieutenant-Colonel William Malone led his Wellington Battalion up the slopes of Chunuk Bair. The Wellington Battalion occupied the summit before dawn on 8 August, finding it surprisingly undefended.

But with the sunrise came a barrage of fire from Ottoman Turks holding higher ground, and a desperate struggle ensued.

The peak was hard to defend – only shallow trenches could be scraped amongst the rocks, exposed to fire from Battleship Hill to the south and Hill Q to the north. As the day wore on, the situation became even more dire. Short of ammunition and with precious little water, they resorted to urinating into their Maxim machine guns' cooling systems to keep them operational - a documented wartime practice when water supplies ran out during intense fighting.

Finally, defenders were reduced to hand-to-hand combat with bayonets. Meanwhile, troops unaccustomed to mountain warfare fought in the scorching heat for hours, facing appalling conditions that tested the very limits of human endurance.

For one brief moment, New Zealand soldiers stood atop the highest point of the Sari Bair range; looking across the Dardanelles, with ancient Troy to their right, and to a Europe at their left that had never seemed so close yet so impossibly distant.

From that elevated position, they could see to the other side of the Dardanelles. It was a vista of both promise and peril - the tantalising possibility of breakthrough, and the terrible reality of what such victories demanded.

More than names on memorial walls

The courage displayed on Chunuk Bair was distinctly our own: Antipodean resourcefulness, married to unwavering duty, executed with the moral bravery that would define the New Zealand character.

Take Lieutenant-Colonel Malone as an example of everything finest about New Zealand leadership. When ordered to repeat the Auckland Battalion's ill-fated daylight attack on August 7, Malone refused, declaring he was "not going to ask my men to commit suicide"[i] and insisting his battalion would capture Chunuk Bair after dark.

Malone led from the front throughout that terrible day, conducting the defence with rifle and bayonet in hand, reportedly doing jobs from Lance Corporal to Brigadier General. He was killed around 5pm by artillery fire, possibly from friendly forces. His death marked not just the loss of a remarkable soldier, but the end of an era of innocence for a young nation.

Among those who fell was John Blair Thompson, my great-great uncle. A sandy-haired young lad from Edendale, a cheese maker; his sacrifice represents thousands of families forever changed by those distant battles.

Of the 760 Wellington Battalion men who captured the summit that morning, only 70 walked away unwounded.

My uncle's grandfather Charlie 'Nuts' Goldstone was among the survivors, albeit badly wounded, having served in the signal corps alongside Corporal Cyril Bassett, the New Zealand Expeditionary Force's only Victoria Cross recipient during the Gallipoli campaign. For three days, Bassett repeatedly crawled through deadly ground, repairing telegraph cables while Turkish rifles cracked overhead.  His citation records how he "showed most conspicuous bravery" laying telephone lines "under very heavy fire."[ii]

Without these communications the men would have been completely cut off, unable to call for artillery support, reinforcements, or medical assistance. Bassett's courage under fire represented the unsung heroism that made the difference between survival and annihilation.

Each name on those memorial walls represents not just a life lost, but futures unrealised, families incomplete, and dreams unfulfilled. These were not professional soldiers, but citizens who answered their country's call - farmers and clerks, fathers and sons, united in their belief that some causes transcend personal safety.

The Price of Becoming

By August 10, New Zealand troops were relieved by British battalions who were quickly overwhelmed after fierce Ottoman counterattacks led by Mustafa Kemal, and the summit was lost.

The cost was devastating. Over five days, over 880 New Zealanders were killed and close to 2,500 wounded. Yet, something invaluable emerged - a national identity forged in shared sacrifice and mutual dependence.

Some historians argue that 8 August is more significant to New Zealanders than ANZAC Day, because it was our troops' worst and most outstanding day on Gallipoli. While April 25th marks the campaign's beginning, August 8th represents the pinnacle of New Zealand's military achievement - the day when our troops reached the highest point and held it against overwhelming odds, proving our nation's mettle in battle's crucible.

The view from Chunuk Bair was perhaps the first time New Zealanders truly saw themselves as they were: no longer colonists looking back to Britain for guidance, but a people capable of standing on their own in the community of nations. This emerging independence was symbolised by Malone himself, who was well known for flying the New Zealand flag at his former command post at Quinn's Post, choosing our own colours over the Union Jack. The New Zealand flag, officially adopted only in 1902 and still in its infancy by 1915, made its first recorded battlefield appearance at Gallipoli - carried unofficially by soldiers who identified with their homeland's distinct symbol even while serving under British imperial command.

Remembering Forward

As we commemorate this anniversary, we honour more than just those who lost their lives. We remember it because these events shaped who we became as a people. The courage of Malone and his men – and thousands like them – all became part of our national DNA.

In our present, it's easy to forget that the freedoms we enjoy were purchased with such terrible coin. The democracy we take for granted, the independence we assume as birthright, the international respect we've earned - all flow from moments like dawn on Chunuk Bair, when ordinary New Zealanders did extraordinary things because they believed in something larger than themselves.

The summit may have been lost, but the battle was won in ways its participants could never have imagined. They gave us not just their lives, but their example. They showed us who we could become.

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This article is dedicated to the memory of my great-great uncles John Blair Thompson and John Hewitt and all who fell at Gallipoli, and to the families who bear their memory forward.

[i] https://ww100.govt.nz/lieutenant-colonel-william-george-malone

[ii] https://nzhistory.govt.nz/media/sound/cyril-bassett-and-chunuk-bair

• Nick Stewart (Ngāi Tahu, Ngāti Huirapa, Ngāti Māmoe, Ngāti Waitaha) is a Financial Adviser and CEO at Stewart Group, a Hawke's Bay and Wellington based CEFEX & BCorp certified financial planning and advisory firm. Stewart Group provides personal fiduciary services, Wealth Management, Risk Insurance & KiwiSaver scheme solutions. Article no. 419.

• The information provided, or any opinions expressed in this article, are of a general nature only and should not be construed or relied on as a recommendation to invest in a financial product or class of financial products. You should seek financial advice specific to your circumstances from a Financial Adviser before making any financial decisions. A disclosure statement can be obtained free of charge by calling 0800 878 961 or visit our website, www.stewartgroup.co.nz